Don’t Worry About Obamacare – Feds’ Health Benefits Are Safe

People tend to define financial security by the numbers in their paychecks: Namely, salary, bonuses, and deductions for health care and retirement benefits.

Federal employees, many of whom probably scoffed at the mention of bonuses, face uncertainty over pay and pensions right now. It’s looking like they might get their first across-the-board pay increase in three years in 2014, if Congress doesn’t reject President Obama’s proposed 1 percent pay bump between now and the end of the year. The boost is probably more symbolic than actually useful to many people, but still, it’s something. The debate over federal employee pensions -- whether to require feds to contribute more to them or to eliminate them altogether -- continues to crop up in deficit reduction talks in Washington. Then there’s the certainty of more furloughs in 2014 if sequestration continues, or heaven help us, there is another government shutdown.

There’s a bright spot though: the Federal Employees Health Benefits Program. Yes, premiums have increased; some government workers have complained that increases in their premiums, co-payments and prescription drug expenses during the past few years are much more than the average and add insult to injury on top of the three-year pay freeze and furloughs. But premiums, at least, are not as high as they could be, or as costly as the health care expenses for many people and their families who are not enrolled in FEHBP. The Office of Personnel Management also has added plans to the health care program, giving federal employees and retirees more options for 2014. As beneficiaries peruse their choices during FEHBP’s annual open season, it’s very important for them to remember one thing: their health benefits are safe under Obamacare.

OPM has taken pains to reassure FEHBP participants that they can retain their health insurance and that the 2010 Affordable Care Act’s insurance marketplace will not affect FEHBP. But the guidance bears repeating, especially now. FEHBP exceeds the minimum coverage required by the law, and federal employees and retirees can keep their FEHBP coverage if they are happy with it.

This is a relief to many feds and retirees given the botched rollout of healthcare.gov and the problems people have had signing up for health care.

Obamacare did introduce a few significant changes to FEHBP: extending coverage for children of enrollees up to age 26, which began in 2011, and coverage for employees of Indian tribes and organizations. OPM opened enrollment for tribal employees on May 1, 2012, adding more than 20,000 people to the FEHBP rolls. The health care reform law also led OPM to require more preventive treatments in each FEHBP plan. Such measures include screening and counseling for alcohol abuse, tobacco use intervention for children and adolescents, and hepatitis C screening.

The two health insurance programs, despite their similarities, are completely separate. Federal employees who have opted out of coverage because it’s too expensive will have to choose between enrolling in the exchange network or FEHBP. FEHBP likely offers better bang for the buck. The program, which will have 256 health plans in 2014, could add more participants to its beneficiary pool because of Obamacare.

FEHBP beneficiaries, however, probably have lots of other questions pertaining to Open Season and their coverage. For instance, if an enrollee switches health plans during Open Season, which ends Dec. 9, the new coverage takes effect on the first day of the first full pay period in January 2014. If you need medical care before that date, use your “old” plan. And FEHBP still does not offer a “Self Plus One” option. Enrollees have to choose between a Self Only enrollment and Self and Family coverage.

For answers to these and other Open Season questions, check out OPM’s Frequently Asked Questions page.

Military Pay

The Senate is debating and will vote before Thanksgiving on its fiscal 2014 Defense authorization bill. The legislation includes a 1 percent pay raise for military personnel in 2014, which is what Obama has recommended for troops. But the House in June approved a 1.8 percent pay hike for military service members next year, which sets the stage for a pay debate. If the Senate sticks with the 1 percent pay raise, then lawmakers will have to reach consensus during conference committee on the final amount to give service members. Current law mandates a 1.8 percent boost for service members for 2014; the formula for determining service members’ annual pay increase is based on the Bureau of Labor Statistics' Employment Cost Index and the growth in private-sector wages.